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Investigating The Influence Of Country Credibility On The Chance Of Currency Crisis

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  • Bilge Kagan Ozdemir

Abstract

This paper deals with the relationship between country credibility and currency crises by using crosscountry pooled data with a multinomial logit model. We use Corruption Perception Index (CPI) published by Transparency International, which is a global non-governmental organization devoted to combating corruption, as a proxy for country credibility. The main findings from the multinomial logit models indicate that country credibility has a significant influence on currency crisis. The applied corruption index is statistically significant. Negative coefficients on this index prove a relationship between country corruption and the likelihood of currency crisis. Moreover, marginal effects of corruption index are high in relation to marginal effects of other explanatory variables. These results suggest that approaching currency crisis should capture country corruption itself or any other proxy of country prestige.

Suggested Citation

  • Bilge Kagan Ozdemir, 2008. "Investigating The Influence Of Country Credibility On The Chance Of Currency Crisis," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 2(2), pages 117-126.
    • Handle: RePEc:ibf:ijbfre:v:2:y:2008:i:2:p:117-126
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    More about this item

    JEL classification:

    • E51 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Money Supply; Credit; Money Multipliers
    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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